BILL ANALYSIS
AB 2738
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2009-2010 Regular Session
BILL NO: AB 2738
AUTHOR: Niello
AMENDED: August 2, 2010
FISCAL: Yes HEARING DATE: August 9, 2010
URGENCY: Yes CONSULTANT: Randy Pestor
SUBJECT : ADMINISTRATIVE PROCEDURE ACT
SUMMARY :
Existing law :
1) Under the Administrative Procedure Act (APA) (Government
Code 11340 et seq.) establishes rulemaking procedures and
standards for state agencies. State regulations must also
be adopted in compliance with regulations adopted by the
Office of Administrative Law (OAL). The APA, among other
things:
a) Requires every agency to prepare and submit a
specified notice of the proposed action and make certain
information available to the public (e.g., draft
regulation in "plain English"; statement of reasons for
proposing the adoption, amendment, or repeal of a
regulation; evidence to support a determination that the
action will not have a significant adverse economic
impact on business). (11346.2). The statement of
reasons must identify each technical, theoretical, and
empirical report upon which the agency relies in
proposing the regulation. (11346.2(b)(2)).
b) Requires state agencies in proposing to adopt, amend,
or repeal any regulation to assess the potential for
adverse economic impact on California business
enterprises and individuals. In assessing the potential
for adverse economic impact, state agencies must meet
certain requirements (e.g., be based on adequate
information concerning the need for, and consequences
of, proposed action; consider industries affected
AB 2738
Page 2
including the ability to compete with businesses in
other states). State agencies must also assess whether,
and to what extent, regulations will affect certain
matters (e.g., creation or elimination of jobs in the
state, creation of new businesses or elimination of
existing businesses in the state, expansion of
businesses currently doing business in the state).
(Government Code 11346.3).
c) Requires the notice of proposed adoption, amendment,
or repeal of a regulation to include certain matters
(e.g., include specified information if there may be a
significant, statewide adverse economic impact;
description of all cost impacts to be incurred by a
private person or business; statement of the results of
the economic impact assessment). (11346.5).
d) Contains various provisions relating to performance
standards, including: (i) legislative intent that
agencies seek to substitute performance standards for
prescriptive standards wherever performance standards
can be reasonably expected to be as effective and less
burdensome (11340.1), (ii) definitions for "performance
standard" and "prescriptive standard" (11342.570 and
11342.590), and notification to seek information on
performance standards (11346.5(a)(7)(C)(iii)). If the
adoption or amendment of a regulation would require use
of specific technologies or equipment, the statement of
reasons for proposing the regulation must include a
statement of reasons why the agency believes these
"mandates or prescriptive standards are required" and
the imposition of performance standards must be
considered as an alternative (11346.2).
e) Requires OAL to either approve a submitted regulation
and transmit it to the Secretary of State for filing, or
disapprove it, within 30 working days. If OAL fails to
act within 30 days, the regulation is deemed approved
and OAL must transmit it to the Secretary of State.
(11349.3).
2) Provides the California Air Resources Board (ARB) with
AB 2738
Page 3
primary responsibility for control of mobile source air
pollution, including adoption of rules for reducing vehicle
emissions and the specification of vehicular fuel
composition. (Health and Safety Code 39000 et seq. and
39500 et seq.). When making information available to the
public under the APA relating to studies and reports that
ARB relied upon, ARB must also make information public that
is related to, but not limited to, air emissions, public
health impacts, and economic impacts before the comment
period for any regulation proposed for adoption by the ARB.
(39601.5).
This bill , under the Administrative Procedure Act:
1) Revises 11346.2 "statement of reasons" requirements (1 d)
above), to require an agency, in the case of a regulation
that would require use of specific technologies or
equipment, or prescribe actions or procedures that would
require use of specific technologies or equipment, to:
a) Acknowledge that imposition of a performance standard
is generally the preferred alternative to requiring
specific methods of compliance.
b) Identify and describe elements of a regulation that
require or may require at least one alternative method
of compliance, the use of specific technologies,
equipment or actions or procedures that would require
use of specific technologies or equipment, or other
potentially propriety compliance scheme, methodology, or
process.
c) Provide justification for departing from the
acknowledged preference of imposing performance
standards, and specify why certain technologies,
equipment, actions or procedures requiring use of
specific technologies or equipment, are necessary in
order to meet the goals of the regulation, instead of
imposing a performance standard.
2) Contains an urgency clause.
AB 2738
Page 4
COMMENTS :
1) Purpose of Bill . According to the author, "During the
rulemaking process, a state agency is required to prepare
an Initial Statement of Reasons (ISOR) whenever it proposes
to create, repeal or amend a regulation . . . An ISOR
describes the basis of the regulation, the purpose of the
rule, how it is intended to be implemented and the data on
which the public agency relied to develop the proposed
regulatory change. Importantly, an ISOR must provide a
description of reasonable alternatives to the rule being
proposed."
The author notes that "AB 2738 would retain the requirements
for an agency to review reasonable alternatives, but it
would amend the language regarding the consideration of a
performance standard as an alternative. AB 2738 would
instead require an agency to acknowledge that a performance
standard is generally a preferred alternative to a specific
technology mandate, specify all ways in which specific
technology may be mandated, and provide a detailed
justification of why a specific technology is being
proposed over the preferred alternative. As the
statutorily defined preferred alternative, a performance
standard would still be included in any agency's review of
reasonable alternatives, as under current law."
Under the APA, a "performance standard" means a regulation
that describes an objective with the criteria stated for
achieving the objective. A "prescriptive standard" means a
regulation that specifies the sole means of compliance with
a performance standard by specific actions, measurements,
or other quantifiable means.
2) AB 2738 conflicts with APA and agency implementation of
state law . According to the APA, "Each regulation adopted,
to be effective, shall be within the scope of authority
conferred and in accordance with standards prescribed by
other provisions of law." Also, according to the APA,
"Whenever by the express or implied terms of any statute a
state agency has authority to adopt regulations to
implement, interpret, make specific or otherwise carry out
AB 2738
Page 5
the provisions of the statute, no regulation adopted is
valid or effective unless consistent and not in conflict
with the statute and reasonably necessary to effectuate the
purpose of the statute."
By specifically requiring state agencies to acknowledge a
performance standard as the preferred alternative under the
APA, AB 2738 may have the effect of indirectly revising a
statute, or the intent of a statute - which is inconsistent
with the APA.
It is noteworthy that the Pacific Merchant Shipping
Association (PMSA), sponsor of AB 2738, recently challenged
ARB over its Marine Vessel Rules regarding emissions of
particulate matter, nitrogen oxide, and sulfur oxide -
which can be considered performance standards. The ARB may
also be required to obtain a waiver for emission standards
from the US Environmental Protection Agency under certain
conditions. AB 2738 would thereby pressure ARB into
adopting performance standards that PMSA could challenge,
while also forcing ARB to seek a USEPA waiver.
3) Deterrence to new and emerging technologies ? Potential
manufacturers of a technology may not proceed to more
aggressively develop and market a device until they are
assured that a requirement has been adopted and is
effective.
While there are many examples where new requirements drive new
and cleaner technologies, the premise of AB 2738 is that a
performance standard will achieve the requirement of a
statute. Based on that premise, the state would not be
able to pursue, for example, certain emission reduction
measures (e.g., Phase II reformulated gasoline, on-board
diagnostics for heavy duty trucks, low emission vehicles).
4) Current law already addresses performance standards and
requires justification for rejecting alternatives . Current
law contains several provisions relating to performance
standards and rejected alternatives. For example, if a
regulation would mandate the use of specific technologies
or equipment, or prescribe specific actions or procedures,
AB 2738
Page 6
the imposition of performance standards must be considered
as an alternative.
Furthermore, if the adoption or amendment of a regulation
would require use of specific technologies or equipment,
there must be a statement of reasons "why the agency
believes these mandates or prescriptive standards are
required."
AB 2738, on the other hand, requires an agency to "Acknowledge
that the imposition of a performance standard is generally
the preferred alternative to mandating specific methods of
compliance" and to provide "justification for departing
from the acknowledged preference of imposing performance
standards . . ." AB 2738 also contains additional
reporting requirements for a state agency if proposed
regulations deviate from what the sponsor wants to be the
acknowledged preferred alternative.
5) Responding to concerns . As noted above, current law
requires: a) consideration of performance standards as an
alternative, b) a statement of reasons for mandating
prescriptive standards, and c) justification for rejecting
reasonable alternatives. A missing link is a requirement
to describe any performance standard or standards that were
considered as an alternative. PMSA concerns could be
addressed by: a) requiring agencies to describe
performance standards that were considered, and b) placing
current law in a clearer order.
SOURCE : Pacific Merchant Shipping Association
SUPPORT : None on file
OPPOSITION : None on file